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curreyr

curreyr
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  • My Transition To Required Minimum Distributions (RMDs) [View article]
    Mike,
    It sounds that easy, but not so much.
    Say you have 100k trad ira all tax deferred, you no longer qualify for tax deferred contributions, so you back-door. So, you do an after tax contribution to the trad. Ira you then convert to a Roth. Guess what, you have a tax bill that includes a percentage of the previously deferred trad ira contributions.
    Mar 12 10:42 PM | 1 Like Like |Link to Comment
  • Rich And Retired? Don't Buy Dividend Stocks [View article]
    User,
    The 15.3 reference was my mistake, I meant to to refer to the 1.4m you provided, the tax bite on that is likely to be significant before the excess can then be put to further work.

    For a portfolio of this size, it is likely to be structured into trust(s). It's a low threshold for a trust to have top level taxation.

    As to taxation at death, my uncle left his fortune to his brother at death (via will), it was substantial, and was literally nearly halved after all was done.

    As I mentioned earlier, this individual needs estate planning FIRST, investment planning is the easy part.
    Mar 12 10:30 PM | Likes Like |Link to Comment
  • My Transition To Required Minimum Distributions (RMDs) [View article]
    David,
    It's actually kinda sad ... make TOO much and you can't contribute a dime.
    Mar 12 07:50 PM | 2 Likes Like |Link to Comment
  • My Transition To Required Minimum Distributions (RMDs) [View article]
    Mr. Fish is correct, if you don't have the brokerage do the withholding, you are responsible for paying the estimated tax. If you fail to have a "timely" withholding (IRS considers this quarterly), then you are subject to a penalty.
    Mar 12 07:26 PM | 2 Likes Like |Link to Comment
  • My Transition To Required Minimum Distributions (RMDs) [View article]
    bionic,
    Easiest way to think is that IRA holdings (traditional or roth) have NO cost basis. Buy/sell at will (and avoid churn fees).
    The "basis" is $0 when you take a distribution.
    From a Traditional that gain is ordinary income, not long term cap. gain. From a Roth, it's untaxed after 59.5 (prior to that contributions, conversions, and earnings have some governance).

    One note, you can't apply capital losses in the IRA to gains in taxable accounts!
    Mar 12 07:23 PM | 1 Like Like |Link to Comment
  • My Transition To Required Minimum Distributions (RMDs) [View article]
    bionic, yes, that is true.
    There is an IRS pub that details the Roth distribution treatment prior to 59.5 (sorry don't have the link at the moment). After that it's all no-tax, no-penalty.

    In general it is in order:
    1) contributions come out, no penalty.
    2) conversions past 5yrs come out, no penalty.
    3) conversions under 5yrs come out, with penalty.
    4) earnings come out, with penalty and tax on the earnings.

    Plan well, and you can fit category 1 or 2 prior to 59.5. At that point enjoy.
    Mar 12 07:12 PM | Likes Like |Link to Comment
  • My Transition To Required Minimum Distributions (RMDs) [View article]
    As Mr. Fish says, it's a personal decision ...
    My addition would add, what do you expect to pay during retirement? If you expect to be taxed at a 25% marginal, max to that limit too. Some may expect a 15% marginal in retirement, so make that the number.

    As I mentioned further up, make your guess/expectation of your tax rate during retirement. I would like to think that many/most will be successful during accumulation years to have a VERY well funded retirement, and today that's roughly a 25% marginal.
    Mar 12 06:16 PM | 1 Like Like |Link to Comment
  • Rich And Retired? Don't Buy Dividend Stocks [View article]
    Mike,
    Sorry, but you fail to account for the taxation.
    That 15.3 is likely to be 9ish after tax.

    And gawd forbid he dies next week ... cut that 15m in half for heirs.
    Mar 12 06:08 PM | 1 Like Like |Link to Comment
  • My Transition To Required Minimum Distributions (RMDs) [View article]
    Marty,
    "When in such an account, the compounding is done without taxation until retirement, when the tax rate will likely be lower."
    You have an assumption baked in. Not saying it's wrong, but it is an assumption.

    From your bio, you now have 150% of your previous salary. Conrats, but is your tax rate lower now than when you deferred? If it's lower then the deferrence was worthy, if same it's a wash, if higher then it wasn't as worthy.
    Mar 12 05:33 PM | 2 Likes Like |Link to Comment
  • Rich And Retired? Don't Buy Dividend Stocks [View article]
    "I'll just let that image burn itself into everyone's brain... "
    Which aspect, "spandex" or "nude" ...
    Mar 12 04:50 PM | 1 Like Like |Link to Comment
  • Rich And Retired? Don't Buy Dividend Stocks [View article]
    TMI ....
    Mar 12 04:42 PM | 3 Likes Like |Link to Comment
  • My Transition To Required Minimum Distributions (RMDs) [View article]
    misscbd,
    I'm not sure what you mean by "semi-retired", but if you have any earned income, that can be conributed. Furthermore, you can convert any amount you like, but it will be taxed.

    I consider myself "temporarily-retired" (short for laid-off). I have planned for it and for the next 2-3 years have a very low taxable income (but a sufficient gross). I will use the low tax years to convert.
    Mar 12 04:41 PM | 1 Like Like |Link to Comment
  • My Transition To Required Minimum Distributions (RMDs) [View article]
    misscbd,

    The info you have is accurate.

    There are two ways of putting money into a Roth.
    1) contribution. This requires earned income, and subject to earned income limits.
    2) conversion. No earned income requirement, and taxed as ordinary income.

    The RMD has to happen (and it isn't earned income), and then you can utilize the 2 methods above, as applicable.

    The "window" your referring to I think is that in '10-'11 (or so), one could do a conversion and have the tax implication split over 2 years. A conversion is still possible, but the entire amount of the conversion will be applicable to the tax year done, versus the short lived rule that allowed it split over 2 years.
    Mar 12 04:24 PM | 1 Like Like |Link to Comment
  • Rich And Retired? Don't Buy Dividend Stocks [View article]
    I'll echo what some others have said ... This individual needs estate planning advise NOW. Investment planning for him is secondary since the wealth available can provide more than adequate income needs.

    A few options to consider:
    One-time gift(s) to heirs. They may have much lower tax implications and longer timeframes.
    Assume family debt (preferably in a trust). For example, buy a childs mortgage, in which they pay interest to a trust they are a beneficiary of instead of to a bank.
    Mar 12 04:09 PM | 2 Likes Like |Link to Comment
  • My Transition To Required Minimum Distributions (RMDs) [View article]
    Norman,
    In addition to the "major" expenses you mention another to consider might be home improvements that qualify for a tax credit or deduction. Some of the energy related ones can be seen here: http://1.usa.gov/1iBi53z
    Mar 12 02:01 PM | 2 Likes Like |Link to Comment
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